Mortgage Rates Slipped Off 2017 Lows

Mortgage rates started at their low point of 2017, but by the afternoon, we slipped a little after the stock market rallied this afternoon. The 10yr found a new resistant mark at 2.20% as it climbed back to 2.25% by days’ end.  Although rates may be slightly worse than this morning, rates are still effectively at 2017 lows.

 

The North Korean tensions are momentarily relaxing with most now believing China will exert its strong influence and quiet the North Korean fears, whether they will, and whether they will not is still not certain but it is unlikely the US will attack the country unless there is additional agitation from the isolated country that has real no worth except building bombs. That will not be allowed as the US has made clear.  

Two reports this morning, the NY Empire State manufacturing index and April NAHB housing market index, showed both weaker than forecasts on the headlines.  Tomorrow, we get March housing starts and permits, along with March industrial production.

The 10yr is at a five-month low and mortgage rates are also about the same.  There are a few of us that are the lone rangers when the Fed increased rates, saying we believed rates would decline not increase. Markets had blinders on worrying more about the Fed’s intended two more rate increases and the beginning of the Fed reducing its balance sheet. We were more concerned with geo-political situations, but who would have believed that Trump would move as rapidly as he did on Syria and the N. Korean situation, as it was just beginning to brew. Now we expect a little retracement but not the end of the rate declines. The stock market, still over-extended and is likely to decline from these present levels. Economic data weaker, no tax cuts this year, no border tax, no fiscal spending of any serious amounts but so far investors willing to ignore the soft near term future for the economy.

In summary, the recent trend has been in our favor as of late.   Geopolitical developments across the globe, softening economic data and political dead lock are all helping.  I do believe further improvements will be slow to come, so I would recommend floating unless you are within 15 days of funding.   Locking on 15 days renders you the best possible pricing.